The Ninth Circuit issued an en banc opinion (here) upholding Section 1103 of the Sarbanes-Oxley Act, which authorizes the SEC to seek a temporary freeze on extraordinary payments by a publicly-traded corporation when it is being investigated by the Commission for possible securities violations. The case, SEC v. Yuen, involves a freeze on a $37 million payment by Gemstar-TV Guide International to its former CEO and CFO who were leaving the company during an SEC investigation into the improper booking of revenue by the company. The court noted that "[s]imultaneous with the internal and external unraveling of this creative accounting mess, CEO Yuen and CFO Leung were cutting a new deal with Gemstar’s Board to 'resign' from their respective executive positions — but remain as employees — in return for a payment in cash by Gemstar to Yuen of $29.48 million and to Leung of $8.16 million, plus large shares of stock and stock options." The majority opinion describes the statute's operation:

Enacted in the disturbing shadow of a flood of corporate scandals, its purpose is to temporarily protect corporate funds and the investing public and creditors against theft, fraud, and dissipation. As the Commission underscores in its brief, (1) the initial escrow lasts for only 45 days with the possibility of a single 45-day extension, see 15 U.S.C. § 78u-3(c)(3)(A)(I), (iv); (2) any person affected by the escrow order has the right to petition the court for relief, see 15 U.S.C. § 78u-3(c)(3)(B)(I); and (3) if no enforcement action is filed before the temporary escrow expires, the "extraordinary payments" involved shall be returned to the issuer or other affected person with accrued interest, see 15 U.S.C. § 78u-3(c)(3)(B)(ii).

The Ninth Circuit found that the term "extraordinary" was not void for vagueness, describing the rationale for the temporary freeze authority:

One after another, many persons, companies, and pension plans have been left holding an empty bag after corporate insiders committed fraud and other corporate crimes and misdeeds at the ultimate expense of the corporation’s shareholders, creditors, and innocent employees. By the time the authorities have been alerted to the fraud, it’s too late; the assets of the company have already disappeared, rendering the traditional remedies used by the Commission to rectify such wrongs — disgorgement, civil penalties, restitution, etc. — difficult, if not impossible, to pursue. In the meanwhile, the disappearance of such funds impoverishes and damages the issuer itself, once again to the detriment of the shareholders, creditors, and innocent employees, whose pensions in many cases have been permanently thrashed. Ultimately, our nation is the victim, as the public loses confidence in the stock market.